Errors of Enchantment

The Feed

NM Supreme Court Textbook Decision Senseless

11.13.2015

As reported in today’s Albuquerque Journal, the New Mexico Supreme Court has ruled that children in private schools should not be allowed to receive textbooks paid for by taxpayers.

Now, we at the Rio Grande Foundation believe that the number of things government should pay for to be quite limited, but it is hard to see how a family’s decision to send their child to a private school should force them to give up any claim to the tax dollars they have forked over to the state to pay for education. It’s not like tax dollars are being used to pay for religious textbooks or something not taught in the traditional schools. Rather, these dollars are benefiting New Mexico children — children of taxpayers — just the same.

The US Supreme Court has already ruled on this issue, approving the use of tax dollars for non-religious materials provided to religious schools in Mitchell v. Helms.

That decision said in part that since the loans were suitable for both religious and public schools, the government was not serving to advance religion.

Accordingly, the government may now provide aid to religious groups as long as such aid advances some legitimate non-religious purpose and is granted in the same manner to non-religious groups.

Not sure what the next steps are but one wonders if this decision shouldn’t be appealed to the Nation’s highest Court. The good news is that our liberal New Mexico Supreme Court has a bit more balance with the addition of its newest justice.

Time to prioritize at Albuquerque City Hall

11.12.2015

 In the wake of two recent shooting tragedies and ongoing negative attention for the city of Albuquerque, Mayor Richard Berry has asked New Mexico’s Legislature to make changes to the pension system in order to allow police to return to the workforce. The Albuquerque Police Department says 135 officers need to be hired to fully flesh out the local police force.

Earlier this year, the mayor proposed spending an additional $4.7 million to comply with the U.S. Department of Justice’s reform demands at APD. We can all agree that public safety is the first and most important role of government. Unfortunately, there are always infinite wants and limited means to provide those, and it seems like local governments and the local citizenry have been unwilling to prioritize. Over the years, this has led to higher taxes and real economic harm.

At the start of the 2000s, Albuquerque’s gross receipts tax (GRT) rate stood at 5.8125 percent. Currently, it’s 7.1875 percent — an increase of 23.7 percent. That rate will further jump to 7.3125 percent when the recently-passed ABQ BioPark tax hike is in place, a nearly 26 percent increase since 2000. All those tax hikes of a “fraction of a penny” have added up over the years to real money.

Today, our city has 17,100 fewer jobs than at its pre-Great Recession employment peak in March 2007. Yes, New Mexico’s economy remains weak, but its largest city is not helping.

Unfortunately, we’re just getting started. For more than a year now, Berry and a majority on city council have been promoting a costly and unnecessary bus rapid transit system along Central Avenue.

Full text of the article is available from Albuquerque Business First.

Another victory for school choice: Louisiana

11.11.2015

When it came to education, it used to be that New Mexicans could “thank God for states like Louisiana and Nevada. Normally it was Mississippi and Alabama, but there were we were towards, but not always at the bottom of educational performance measures. Well, according to the US Department of Education, we are now at the very bottom in terms of graduation.

But other states that have traditionally struggled with educational outcomes are not standing still. They are providing real choices to parents and students. Earlier this year, Nevada enacted the most ambitious school choice program in the nation called Education Savings Accounts.

Louisiana too has traditionally struggled with educational outcomes, but under Gov. Bobby Jindal, the State created a statewide system of school vouchers. The Obama Administration sued Louisiana to allow the federal government to regulate the program, but yesterday the Fifth Circuit U.S. Court of Appeals ruled against Obama Administration’s position.

It would be great if New Mexico’s Senate Democrats would stand up to their friends in the teachers’ unions and embrace school choice as a response to Gov. Martinez’s testing and common core-driven reforms. I’m not holding my breath.

Report: New Mexico receives $1.69 for every $1.00 it sends to Uncle Sam

11.10.2015

New Mexico has always been a big recipient of federal tax dollars (at least since the 1940s). A new report from Key Policy Data sheds some additional light on just how much New Mexico receives and which areas of New Mexico are more and less reliant on Washington, DC.

In Fiscal Year (FY) 2013, New Mexico is the third biggest net receiver of federal spending relative to federal taxes paid. Only Kentucky and Mississippi received more.

The report further breaks the situation down on a county-by-county basis:

The top ten New Mexico counties with the highest federal tax and spending ratios include:

Los Alamos County, NM ($6.52)
Mora County, NM ($3.62)
Hidalgo County, NM ($3.53)
Guadalupe County, NM ($3.49)
Sierra County, NM ($2.59)
San Miguel County, NM ($2.52)
Quay County, NM ($2.51)
McKinley County, NM ($2.49)
Otero County, NM ($2.28)
Curry County, NM ($2.26)

The bottom ten New Mexico counties with the lowest federal tax and spend ratios include (only 2 counties receive less in federal spending than they pay in federal taxes):

Sandoval County, NM ($0.61)
Lea County, NM ($0.86)
Valencia County, NM ($1.04)
San Juan County, NM ($1.08)
Eddy County, NM ($1.17)
Lincoln County, NM ($1.19)
Torrance County, NM ($1.30)
Santa Fe County, NM ($1.48)
Chaves County, NM ($1.51)
Dona Ana County, NM ($1.55)

The image below shows visually which counties receive more and less from Washington.

Priorities, Mr. Mayor?

11.09.2015

civic_plaza

As Albuquerque’s mayor congratulates himself over the latest plan for “downtown revitalization” (price tag: $23.5 million), it’s important to remember that the Duke City has far more urgent concerns than building a retractable-roof arena and an “interactive, family-friendly, modern and sustainable water element.”

* The “city’s crime numbers have been steadily rising over the past four years.”

* The Albuquerque labor market has yet to regain the number of jobs in had more than seven years ago. Unemployment in the metro area is rising.

* The passenger count at the Albuquerque International Sunport has fallen for eight years in a row.

* Developers continue to report that dealing with the city’s red tape is a nightmare. Roy Solomon, of Green Jeans Farmery, recently told the Albuquerque Journal: “I’m not going to do another project in this town ever, ever again.”

New Mexico’s Other Space Boondoggle

11.06.2015

firefall

Earlier this week, an “experimental rocket being tested by the U.S. Air Force’s Operationally Responsive Space Office, based at Kirtland Air Force Base, blew up just seconds into its debut mission.”

The ORS office has been deeply troubled since its start. Politics, delays and turf battles have been the norm. The failed launch of the “Super Strypi rocket, based on designs developed by Sandia National Laboratories as part of nuclear testing programs dating back to the 1960s,” took place more than two years behind schedule. Since February 2012, the Air Force has wanted to shut ORS down, and transfer its duties to the Space and Missile Systems Center in Los Angeles.

Uh oh — that means job losses in New Mexico. And the Land of Enchantment’s fedpols can’t have that. ORS has been the congressional delegation’s baby since 2007. Pete Domenici and Jeff Bingaman lobbied heavily to bring it to Kirtland, and more recently, Martin Heinrich has walked point on preserving ORS. Earlier this year, he called it “a program that makes perfect sense from both the monetary and military perspective.”

Please. In a battle between an executive-branch department and and reelection-minded politicians, it’s usually wise to go with the bureaucrats. ORS has an unimpressive record, and if the Pentagon wants to make a change, it should have the flexibility to do so.

New Mexico’s non-group insurance policies increase second-highest among states

11.06.2015

If you don’t read Forbes frequently, they do some excellent reporting and analysis on health care issues. This recent article “Obamacare Has Increased Non-Group Premiums In Nearly All States” caught my eye, especially since New Mexico was in line to see the 2nd-highest rate of increase among the states in 2014.

As the article noted, these rapid increases defy numerous categorical assurances from President Obama such as:

“We’ll lower premiums by up to $2,500 for a typical family per year…We’ll do it by the end of my first term as president of the United States”

New Mexico’s Wind Welfare

11.05.2015

The Institute for Energy Research has released an updated analysis of “the distributional impacts of federal subsidies for wind energy across all U.S. states.” It found that taxpayers from the Northeast, Southeast, and California are getting socked to support wind turbines in the rest of the country.

Not surprisingly, New Mexico is net recipient of wind welfare. The federal “wind tax burden” in the Land of Enchantment over the past decade was $59 million, while producers here got an estimated $352 million in subsidies. That’s a staggering “gain” of $293 million.

sw_wind

Read the full study here. It offers more documentation of the unfairness — and ineffectiveness — of “green” corporate welfare.

No, we’re not stuck with the Rail Runner

11.05.2015

Today, the front page of the Albuquerque Journal had an interesting story about the plight of the State’s commuter train, the Rail Runner, and whether it would be feasible to sell it or simply get rid of it.

I’ve looked at the data and the study itself (thanks for passing it along Dan Boyd) and, I have to disagree with some of the study’s conclusions. That said, it is amazing how public opinion has turned against the train which Bill Richardson said would go from El Paso to Denver. Also, the study correctly notes that selling the train is a non-starter. No one would be foolhardy to invest their own money in a money-losing train like this one.

What the study gets wrong is shutting the train down entirely, an option that would save from $28 to $32 million annually over the next few years. Unfortunately, the study “developed in this analysis mimicked the train trips’ schedules and service patterns.” That’s a bad mistake by itself because a vast majority of riders travel between Albuquerque and Santa Fe. Many of the stops in-between (and within the cities themselves) are superfluous and only slow the train.

This report also fails to account for potential private sector solutions. Why couldn’t a private company run shuttle vans between Albuquerque and Santa Fe? I have taken the Rail Runner, but it is not very convenient. If it goes away and nothing replaces it, we can at least use the savings to pay down the capital costs. If there is really a robust market for transportation between Albuquerque and Santa Fe, the state would do best by getting out of the way.

There’s no reason for taxpayers to have to pay the transportation costs for government workers who want to live in Albuquerque and work in Santa Fe.

Albuquerque’s strange Cleveland Fetish

11.04.2015

Another day, another news story touting Cleveland as a model for Albuquerque.

According to the article linked to above from the ABQ Biz First, Randy Royster of the Albuquerque Community Foundation had some high praise for Cleveland as a model for Albuquerque recently saying,

Our newest effort in this arena of economic and workforce development came about by a trip that was made in August by the Health Sciences Center…The purpose of the trip was to learn about Cleveland’s 10-year effort for creating new companies, new jobs and basically revitalizing the downtown area, which had been basically shuttered a little more than 10 years ago, and not only revitalizing downtown but also its surrounding neighborhoods. And at the core of their process were anchor institutions.

We already know about Cleveland’s bus rapid transit and how Albuquerque’s leaders wish to emulate that model. Now, a consortium of “nonprofit corporations and publicly owned enterprises” is being touted. I just don’t get the Cleveland fetish.


Perhaps it is the fact that I grew up in Cincinnati and have seen Cleveland deteriorate and shrink over the decades, but I know Cleveland is NOT a model Albuquerque should emulate. In 2010, Cleveland native son, game show host, and libertarian, Drew Carey did a whole video series on “saving Cleveland.” That is the kind of thing you do in a struggling city that continues to hemorrhage population.

I fully admit that I don’t know all the details on this proposed medical “consortium,” but spending a bunch of tax money in order to bring in some additional private dollars is not going to do much about Albuquerque’s economic or job creation woes. Same as the bus rapid transit system. Instead, Albuquerque’s leaders would be better served checking out Carey’s video series and applying its lessons to Albuquerque.

Medicaid’s Value as ‘Stimulus’

11.03.2015

However bizarre it sounds to fans of limited government, many Obamacare supporters believed — and continue to assert — that Medicaid expansion is a powerful economic-development tool.

The state-federal welfare program covers over 72 million Americans. Amazingly, more than a third of New Mexico’s population is on Medicaid. Later this month, the Foundation will testify in Santa Fe on the costs and benefits of the governor’s Obamacare-enabled decision to expand the program, and whether the “multiplier effect” from increased Medicaid spending is improving New Mexico’s economy.

We’ve examined the 24 states that expanded Medicaid “on schedule,” in January 2014, and the 20 states that have declined to broaden enrollment. The average job-creation percentage in the two types of states has been almost identical, with a slight edge to the states that did not expand their programs:

medicaid_logo

We’ll be examining other economic indicators as well, but at this point, it appears that making a defective and unsustainably expensive welfare program even bigger is not much of a “stimulus” in terms of employment.

NM Could gain jobs with a right to work law

11.02.2015

New Mexico doesn’t have a jobs problem. It has a jobs crisis.

Nationally, unemployment is falling, but in the Land of Enchantment, it’s rising. Only West Virginia has a higher jobless rate.

Even worse, labor participation for prime-age workers in our state has collapsed. The Pew Research Center recently found that between 2007 and 2015, New Mexico’s employment-to-population ratio for 25-to-54-year-olds plunged by the sharpest rate in the nation.

There are many tools state policymakers can use to restore vibrant job growth, but perhaps no reform offers more promise than passage of a right-to-work law. By ending the compulsory payment of dues to union bosses, New Mexico would send a clear signal that it’s open for business.

Says who? Site-selection experts. They consistently report a significant portion of their clients prefer RTW states.

New research confirms the value of RTW in creating jobs. The Rio Grande Foundation examined investment announcements posted on the website of Area Development, “the leading executive magazine covering corporate site selection and relocation,” between January 1st and June 30th of this year.

During the period, companies declared that they would add 92,923 positions in expansions, relocations and greenfield investments. RTW states were slated to receive 79 percent of employment – a sum, not surprisingly, far in excess of the 47 percent of private-sector jobs found in RTW states.

It’s true that “correlation is not causation,” and other factors – e.g., transportation infrastructure, workforce quality, energy costs, taxes – influence site-selection decisions. That’s why our analysis looks at RTW in several unique ways.

At the broadest level, it examines “quality” jobs – middle- and high-compensation positions in manufacturing, IT, logistics, research and development, finance, and engineering. (No positions in fast food, convenience stores, landscaping, and retail sales are included.)

A further refinement is made for projects that involve “border crossings” – i.e., when a business headquartered in a non-RTW makes an investment in a RTW state, and vice versa.

Relocations, in which enterprises move entire facilities from one type of state to another, are assessed as well.

Finally, foreign direct investment (FDI) is scrutinized, in order to determine which type of states draws the most jobs from firms based abroad.

In total, 113 border-crossing investments were announced. Ninety-six – 85 percent – shifted from non-RTW to RTW. Job-creation followed suit.

In each of the six months examined, more positions were to be created in RTW states by non-RTW-based firms than vice versa. Fourteen facilities announced journeys from non-RTW to RTW, while just three planned to go the other way.

RTW states garnered 98 percent of relocation-related jobs.

In total, 132 FDI announcements were listed. Seventy-three percent were made in RTW states, which garnered 83 percent of jobs. Of the 12 nations that announced more than one FDI in the period, ten indicated a preference for RTW states.

It’s notable that high-population, non-RTW states such as California, New York, Illinois, Pennsylvania, New Jersey, Washington, and Massachusetts did not rank among top job-creators. Also interesting were stellar performances by two Rust Belt states: Indiana (which became RTW in 2012) and Michigan (which became RTW in 2013). Of the 10 states to receive the most employment, nine were RTW.

The reality of jobs growing faster in RTW states has been established for decades. But the foundation’s research shows that banning compulsory unionism does not foster a “race to the bottom.” To the contrary, worker freedom is correlated with employment in well-compensated industries.

Furthermore, firms based in non-RTW states appear to favor expansion in and relocation to RTW states. And RTW states substantially outperform their non-RTW competitors in FDI.

It is not a panacea, but a New Mexico right-to-work law would make the Land of Enchantment more attractive to companies looking to find sites for new facilities and/or relocate existing assets. Shifting New Mexico into the RTW camp is a sound, and cost-free, policy investment to address our state’s jobs crisis.

With the 2016 legislative session around the corner, it’s time for the New Mexico Senate to finally vote on right to work.

D. Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

No more Santa Fe Studios subsidies

11.02.2015

The following appeared in the Santa Fe New Mexican on Sunday, November 1, 2015.

When is $10 million in taxpayer money simply not enough? In the case of the people who already got a sweetheart deal to build Santa Fe Studios, when you can ask for $22 million more.

There is likely no other business in the State of New Mexico that has received as many subsidies as Santa Fe Studios. That hasn’t stopped the Studios have applied for $22 million in industrial revenue bonds to Santa Fe County.

Already, the State has provided $10 million in economic development grants. The County has provided a generous $6.5 million bank loan.

It’s not as if film studios in New Mexico require subsidies. Albuquerque Studios was built without direct taxpayer subsidy. One would think that if Santa Fe Studios’ business was good enough to require expansion, the owners could pay for it themselves like any other business. Unfortunately, once you realize that you can stick you hands into taxpayers’ pockets, the temptation to do so again is hard to resist.

And then there is the lack of transparency. In October of 2013, there was a dustup between another think tank, Think New Mexico, and the Studios over how many films had actually been produced at the Studios. Without a doubt, Think New Mexico was justified in questioning Santa Fe Studios which has given few details on how the tax money they have received has been used.

A November, 2013 story in the New Mexican noted that “Verification of the (Studio’s) job numbers has been less than vigorous. County officials appear to have accepted the hours reported by the studios as fact and have done little to substantiate them.” Santa Fe County needs to increase oversight at a bare minimum before even considering approval of another $22 million.

Of course, the millions of dollars pumped into Santa Fe Studios are only the tip of the iceberg when it comes to New Mexico’s ill-conceived and overly-generous giveaways to Hollywood. The biggest taxpayer rip-off is the $50 million or so each year New Mexico taxpayers throw at the film business in the form of its film rebate program.

Unlike other subsidies offered by the State, the film subsidy is not a reduction or elimination of taxes owed, rather it is a check cut to the film company for between 25 and 30% of taxable spending done in the State. Rather than foregoing otherwise taxable revenue, New Mexico’s film subsidies actually spend revenue collected from other sources.

That is one reason why such subsidies have drawn opposition from across the political spectrum. The liberal Center on Budget and Policy Priorities issued an entire report in 2010 called “Not too much bang for too many bucks.” Another liberal group, Citizens for Tax Justice, wrote in a 2013 blog posting, “Not only do film tax credits cost states more money than they generate, but they also fail to bring stable, long-term jobs to the state.”

Any objective organization, right, left, or center that takes a close look at the economics of film subsidies like those in place in New Mexico finds that they make no economic senses and that they ultimately harm taxpayers and the poor.

Unfortunately, the Legislature seems inclined to keep the gravy train rolling for New Mexico’s film industry at this point. But, Santa Feans can stop throwing their good money after bad by letting the County Commission know that profitable businesses should grow by reinvesting their own money, not by attaining ever-greater taxpayer subsidies.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

Congress lays an egg on budget renewal/Export Import Bank

10.30.2015

It has been a tough few weeks in the Albuquerque area, but for a nation that has only seen modest economic growth since a challenging recession, Congress’s budget deal is extremely troubling for a number of reasons, but mostly because it blows through the budget caps imposed under sequestration. This tool was imposed in March of 2013 when the Obama Administration and Congress could not agree on a budget. Despite a hue and cry over supposed harms to the economy, the sequester had little apparent impact from the date of its imposition in March of 2013 (as seen below).

In part, the trivial impact of the sequester is due to the fact that it simply wasn’t that big of a deal when placed within the context of the US economy:

Of course, liberals see government growth as an inherently good thing, so President Obama has been trying to get rid of the sequester since it was imposed. And, for some reason, outgoing Speaker John Boehner and many Republicans, rather than passing a fiscally-responsible budget and seeing if Obama would veto it, thus shutting down government, decided to wave the white flag in surrender of even modest fiscal restraint and spend more money. New Mexico’s Congressional delegation was split along ideological lines with Lujan-Grisham and Lujan supporting the agreement and Congressman Pearce opposing it. Congressman Pearce deserves a great deal of praise for opposing this terrible agreement. A list of the 79 Republicans who abandoned fiscal constraint to support the deal can be found here.

Unfortunately, the budget deal wasn’t the only damage inflicted upon taxpayers this week. The Export-Import Bank which had been slated for elimination was resurrected. This time New Mexico’s entire House delegation voted to renew the FDR-era corporate welfare machine. The gist of what the Bank does is to subsidize US exports using American tax dollars so foreign businesses (and governments) can purchase US products. Amazingly, New Mexico’s entire Congressional delegation supported renewal despite the Bank’s trivial impact on New Mexico-based businesses (as seen below):

While the left talks a good game about ending “corporate welfare,” the Export-Import bank often subsidizes environmentally-destructive projects in foreign nations like this one in India as reported by the LA Times.

A full roll call of that vote can be found here. The Senate is expected to follow suit by renewing the Bank.

The RTW Advantage, in Two Charts

10.30.2015

Yesterday the Foundation released “Where the Good Jobs Are: A New Look at Right to Work and Employment Growth.” Our paper found further confirmation that businesses and entrepreneurs prefer to expand in, relocate to, and set up shop in right-to-work states, where employees cannot be compelled to surrender a portion of their pay to unions. Even more, the RTW advantage applies to middle- and high-compensation jobs — i.e., there is no “race to the bottom.”

One of the paper’s most interesting findings is that firms based in non-RTW states are shifting their assets and facilities to RTW states. In total, 92 percent of the jobs to be generated by border-crossing investments went from non-RTW to RTW:

border_x_jobs_logo

The story was similar for foreign direct investment. Businesses based abroad preferred labor freedom, with 83 percent of their job growth to take place in RTW states:

fdi_jobs_logo

Is it time for New Mexico, reeling from rising unemployment and a falling labor-participation rate, to go RTW?

Right to Work: Still Right for New Mexico: New Research Confirms Labor Reform’s Value in Economic Development

10.29.2015

(Albuquerque) – A new analysis finds that right-to-work (RTW) states excel at creating quality jobs, and if New Mexico’s policymakers want the state to escape its severe economic woes, repealing compulsory unionism is essential.

“Where the (Good) Jobs Are: A New Look at Right to Work and Employment Growth,” authored by Rio Grande Foundation Research Director Dowd Muska, finds that RTW states far outpace their compulsory-union competitors in creating middle- and high-wage employment.

Muska’s research examined job-creation announcements posted on the website of the publication Area Development between January 1, 2015 and June 30, 2015. Positions were in manufacturing, finance, IT, biotech, research & development, business services, and logistics.

“These are the kinds of jobs that would make New Mexico a more prosperous state,” Muska said. “And they’re the kinds of jobs that politicians’ current economic-development strategies are not producing.”

Of the 92,923 jobs examined in the study, 79.2 percent were slated to be created in RTW states – a sum, not surprisingly, far in excess of the 46.8 percent of private-sector jobs found in RTW states. Both domestic and foreign firms prefer RTW states, and companies that relocate their facilities from one type of state to another overwhelmingly prefer to move to locations where labor freedom is respected.

Right-to-work laws, which were first adopted in the 1940s, free employees from paying compulsory dues to union coffers. Site-selection experts quoted in “Where the (Good) Jobs Are” argue that RTW is a requirement for many businesses looking to site, expand, or relocate their operations. The Rio Grande Foundation’s new research confirms their claim.

“Our organization has long argued that RTW is right for New Mexico,” said Rio Grande Foundation President Paul Gessing. “This new research offers more evidence of a trend that’s been underway for many decades: Right-to-work states outperform compulsory-union states.”

While a RTW bill passed New Mexico’s House of Representatives earlier this year, and Governor Susana Martinez pledged to sign the bill, the legislation did not receive a vote in the state’s Senate. RTW supporters are sure to press for the law in future sessions.

“Where the (Good) Jobs Are” is linked here and can be downloaded from the Rio Grande Foundation’s website, www.riograndefoundation.org.

The Other Side of the Fiscal Crisis

10.28.2015

The inevitable consequences of New Mexico’s profoundly unwise expansion of Medicaid are coming into sharper focus. But fiscal policy has two components: expenditures and revenue. And serious pressure is starting to build on the cash side of New Mexico’s budget.

The Land of Enchantment isn’t alone. Energy-dependent states and provinces are feeling the pain:

* In Oklahoma, the governor has “ordered state agencies … to prepare to cut nonessential expenses by 10 percent.”

* Wyoming‘s Consensus Revenue Estimating Group has “calculated projected losses through June 2018” of $617 million.

* Alaska is facing down a $3 billion deficit, and legislators are examining the incentives the state uses “to get companies to come to Alaska, produce oil and gas, and generate jobs and economic activity.”

* Alberta is projecting “a record deficit on falling revenue.”

It appears that austerity (being rather generous with the term) will remain the standard operating procedure for New Mexico’s budget:

expend

But while spending has been fairly flat in recent years, a two-decade perspective reveals a very different trend. Between 1993 and 2013, per capita, inflation-adjusted spending in New Mexico rose by 47.5 percent:

percap

There appears to be a lot of room in the budget for right-sizing. Pro-taxpayer legislators should get to work on what programs and bureaucracies to cut, combine, contract, compress, and condense.

ObamaCare costs coming home to roost for New Mexico

10.28.2015

Unfortunately, when you head up a free market think tank that is skeptical of grand government schemes, you spend a lot of time saying “I told you so. See the New Mexico Spaceport and Rail Runner for examples, but for a biggie, check out pre-financial crisis efforts by the National Taxpayers Union on the government-sponsored mortgage lender Fannie Mae.

Well, the latest “I told you so’s” are in order thanks to ObamaCare, the massive health care law that put the federal government in charge of 1/8th of the US economy and which the Rio Grande Foundation opposed from the start.

According to a front page story in the Albuquerque Journal which related testimony from the Legislative Finance Committee, Medicaid is going to bankrupt New Mexico in the near future. Rep. Jason Harper said, “..Medicaid is going to be a budget-buster.” and Rep. Larranaga described Medicaid as a “runaway train.” Just to be clear, New Mexico is looking at a one year Medicaid spending increase from $891.7 million to $976.9 million. That’s a 8.5 percent one-year hike. With the federal government’s share of Medicaid expansion costs declining from 100% to 95% in 2017, there is no doubt that New Mexico faces real and long-term budgetary challenges.

A second ObamaCare story got our attention as well, this one from KOB TV which reported that New Mexicans can expect an average price hike of nearly 26 percent – the fourth-highest increase in the country. In a survey of 30 US metro areas, Albuquerque and Santa Fe are seeing the third-highest increase – at 25 percent. Ouch. NOTE: KOB TV corrected its story (here) after this posting was made to indicate that the real annual increase was 7 percent, not 25 percent.  Similar data on New Mexico were reported by the national media as well. Amazing that this law is so complex that even figuring out annual price hikes is a guessing game.

Still Clueless on Millennials

10.27.2015

dead_end

It can be downright mystifying how some people attained the status of “expert.”

Maureen McAvey, the Bucksbaum Family Chair for Retail at the Urban Land Institute, was in Albuquerque yesterday for an event sponsored by her organization and NAIOP-New Mexico. She noted the Duke City’s dearth of Millennials: “The young people you have are not staying here. Jobs are always a challenge, but in lifestyle, you should be able to hit this one out of the park. I’d want to know why these young people aren’t staying here when you have a lot of assets.” After all, in other places, “festivals and music” attract young adults, who want “to be where it’s cool.”

Earth to Maureen: It’s tough to enjoy concerts, growers markets, art-house films, and pub crawls when you don’t have any money. In Albuquerque and throughout New Mexico, unemployment is rising. (Only West Virginia has a worse jobless rate than the Land of Enchantment.)

Not surprisingly, the places where Millennials are flocking — e.g., Houston, Salt Lake City, Orlando, Nashville, Denver, San Antonio, Oklahoma City, Jacksonville, and Las Vegas — tend to have robust economies. As Aaron Duke, a San Francisco-to-Denver transplant, told The Wall Street Journal earlier this year: “You don’t move just because some place is cool. You’ve also got to be able to earn a buck.”

To attract Millennials, Albuquerque needs what the vice president would call “a three-letter word: jobs. J-O-B-S.” But with carnage on the highways, rampant vagrancy downtown, a new tax hike, a burdensome minimum wage, and planning-and-zoning procedures that drive developers away, don’t expect employment growth to pick up anytime soon.

Mayor Berry: time to get the basics of government right

10.27.2015

There it was in today’s Albuquerque Journal business section, yet another business having trouble with burdensome regulations in Albuquerque. Said Roy Solomon, developer of the Green Jeans Farmery, a new development that is struggling with permitting issues at the City, “I’m not going to do another project in this town, ever, ever again.” Ouch.

Worse, this is not the first time a businessman has said something similar about Albuquerque. According to an Albuquerque Journal story from February, Suzanne Lubar of the City’s Planning Department said of the City’s zoning structure, “Nobody has a true sense of what’s allowed and what’s not allowed…It’s not very predictable. I had developers calling and saying, I will never do a development in your city again.”

Of course the zoning and land use planning issue are not the City’s only problems, taxes are on the rise (again), the minimum wage is one of the highest in the nation in real terms, and then there are the recent high-profile violent crimes.

The big “solution” from the Mayor of our City is to foist a costly new bus system on the City’s taxpayers and a long list of businesses in the Central corridor that oppose the project.

Perhaps our City should get the basics like public safety and permitting done in a manner that helps rather than hinders the economy before it embraces a massive and expensive redevelopment of Central Avenue? How about it Mayor Berrry?

Will Udall and Heinrich Vote to Ban the Ban?

10.26.2015

supertanker

The Albuquerque Journal’s Kevin Robinson-Avila has an important piece today on the “volatile ups and downs in crude prices that could push the market — and ultimately production in the southeastern part of the state — to its lowest point in more than a decade.”

Citing numbers from the New Mexico Oil and Gas Association, the reporter noted that “at least 6,000 people are estimated to have lost their jobs in New Mexico since prices began to crash.”

Things are bad now, but they could get worse. Robinson-Avila highlighted the fact that Iran is slated to “aggressively ramp up its oil production next year as international sanctions are lifted following last summer’s deal designed to limit Iran’s ability to develop a nuclear weapon.”

Nearby, the United Arab Emirates wants to be a bigger player, too. Last week the U.S. Energy Information Administration disclosed that the UAE, “the world’s sixth-largest oil producer in 2014,” is “relying on the application of enhanced oil recovery … techniques in mature oil fields to increase production. Using EOR techniques, the government plans to expand production 30% by 2020.”

Lifting the nation’s ban on oil exports isn’t a silver bullet, but it would surely help shore up industry investment and employment in New Mexico. The House of Representative has voted to repeal the ban, as has the Senate Banking Committee. A vote awaits in the full Senate.

Unfortunately, New Mexico’s senators are inexcusably wishy-washy on banning the ban. Tom Udall is “studying the issue and the long-term ramifications for our economy, national security and environment,” while Martin Heinrich is in favor, but only “if it were paired up with, for example, some of the renewable tax credits … that have been so important to the growth we’ve seen in the renewables economy.”

Like passing a right-to-work law, lifting the ban on oil exports costs taxpayers nothing, but has tremendous value as a tool to “create or save” jobs. Are New Mexico’s senators really so dense that they cannot see how selling crude abroad will help the Land of Enchantment?